Finance Bill — Third Reading — 6 Sep 2016 at 17:32

John Baron MP, Basildon and Billericay voted to increase the personal income tax allowance, change the way dividends are taxed, cut capital gains tax and reduce the amount which can be taken out of a pension tax-free from £1.25m to £1m.

The majority of MPs voted to increase the personal income tax allowance, change the way dividends are taxed, cut capital gains tax, and to reduce the amount which can be taken out of a pension tax-free from £1.25m to £1m.

MPs were considering the Finance Bill[1], the Bill was the primary means by which the announcements in the March 2016 budget[2] became law.

The Bill:

Left the income tax rates for 2016-17 unchanged[3] at as follows; basic rate: 20%; higher rate: 40% and additional rate: 45%.

Increased the threshold for starting to pay higher rate tax from £32,400 to £33,500 as of 2017-18.

Increased the income tax personal allowance for 2017-18 to £11,500 (For 2016-17 it was set at £11,000).

Introduced a a personal savings allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for basic rate taxpayers and up to £500 for higher rate taxpayers.

Changed the way dividend income is taxed, abolishing the Dividend Tax Credit from April 2016 and introducing a new Dividends Allowance of £5,000 a year. Rates of tax on dividend income above the allowance were set at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

Reduced the pensions "Lifetime Allowance", the amount that can be drawn from a pension scheme without triggering additional tax, from £1.25 million to £1 million, effective from April 2016.

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